UAE VAT: Supplier Checks Before Claiming Input Tax
From 1 October 2026, a valid tax invoice is no longer the whole story for UAE businesses claiming input VAT. Federal Tax Authority Decision No. 13 of 2026 sets out supplier and transaction verification measures that taxable persons must apply before deducting input tax. The Federal Tax Authority lists the decision in its legislation library, and the new requirements call for procurement and finance teams to coordinate rather than leave checks until a VAT return is being prepared.
Start with the supplier, not just the invoice
The verification process is intended to establish that the supplier is genuine and that the supply received is valid. In practice, the file should show who supplied the goods or services, that the supplier is properly established, and that there is a real business location consistent with the activity. Checks should be proportionate to the supplier and transaction, but they need to be performed and documented, not reconstructed from memory months later.
The decision also identifies warning indicators that deserve explanation, including frequent changes in a supplier’s address or key personnel, or transaction volumes that appear disproportionate to the supplier’s size and business history. These are prompts to investigate and record a reasonable explanation. They are not, by themselves, proof of tax evasion.
Apply the three thresholds carefully
The decision contains different thresholds for different purposes. They should not be blended into one general “small supplier” rule.
For an individual supply, the verification measures may be disregarded only where its consideration is below AED 10,000, excluding VAT, and the same supplier’s total supplies do not exceed AED 100,000 over the previous 12 months and are not expected to exceed AED 100,000 over the next 12 months. The wording matters: a supply of exactly AED 10,000 is not below the limit, and a supplier’s expected purchases matter as well as historical spend.
A further set of checks applies when supplies from one supplier exceed AED 375,000 in the previous 12 months or are expected to exceed that amount in the next 12 months. That threshold calls for written confirmation from an authorised UAE bank that the supplier holds a bank account, along with an assessment of relevant public information and the supplier’s reputation. An IBAN printed on an invoice is not the same as the bank confirmation described by the decision.
Build a repeatable control
Create a supplier onboarding checklist that records the date and source of identity or company-registration checks, representative details, evidence of the business location, and any risk indicators with the explanation and supporting records. Track supplier spend on a rolling 12-month basis and include reasonable expected orders, so the AED 100,000 and AED 375,000 tests are not missed between VAT quarters.
Assign ownership across procurement, accounts payable and the VAT reviewer. Keep the evidence with the supplier record and link each material purchase to its invoice, purchase order, delivery evidence and approval. Where a check raises a concern, pause the input-tax claim until the issue is reviewed; do not treat a complete-looking invoice as a substitute for due diligence.
What the new rule does not mean
The decision does not make every input VAT claim conditional on identical paperwork, nor does a documentation gap automatically establish that a business participated in evasion. The VAT Law’s rules on input-tax eligibility still apply, and the legal consequences depend on the transaction and the taxpayer’s knowledge or what it should reasonably have known. Businesses should assess the facts, retain their reasoning, and obtain advice where the position is uncertain.
Finance teams should review supplier onboarding and existing high-spend relationships now, update internal procedures, and check the official Arabic legislation where interpretation is material. A short, consistent verification trail is easier to defend than a last-minute search for records when the FTA asks questions.
Sources: Federal Tax Authority, FTA Decision No. 13 of 2026, “Measures, Procedures and Conditions Required by Taxable Persons for Verification of Validity and Integrity of Supplies” (https://tax.gov.ae/en/content/fta.decision.no.13.of.2026.on.measures.procedures.conditions.required.by.taxable.persons.for.verification.of.validity.and.integrity.of.supplies.aspx); NRS & Associates, “UAE VAT Supplier Verification: FTA Decision No. 13 from 1 October 2026” (https://www.nrsassociates.in/insights/uae-vat-supplier-verification-fta-decision-13-2026/). General information only, not transaction-specific tax advice.
